Financial institution Shouhui secures profit through successful financial instrument investments.
Shouhui Group Ltd. (2621.HK) has announced a net profit turnaround for the six months through June 2021, primarily due to gains from changes in the book value of financial instruments issued to investors. This reverses a net loss of 750 million yuan reported in the same period last year.
The midday break closing price for Shouhui Group Ltd.'s stock was HK$9.43, marking a significant increase during trading on Friday. The stock opened higher and experienced an increase throughout the day, closing at the same price by the midday break. The closing price represents an increase of 5.79% compared to previous trading levels.
However, the company's adjusted net profit for the six-month period is expected to range from 56 million yuan to 76 million yuan, down by about 50 million yuan to 70 million yuan year-on-year. This decrease is mainly due to growing macroeconomic uncertainty, weaker demand for financial products, and lower brokerage rates in the insurance sector under the government's "integration of reporting and accounting" policy.
Revenue is also expected to decline year-on-year by about 140 to 160 million yuan, showing that the profit turnaround mainly stemmed from accounting gains on financial instruments rather than business growth. Shouhui Group Ltd. estimates it would report revenue of 545 million yuan to 565 million yuan for the first half of the year.
The company's costs and expenses are expected to fall in the range of 75 million yuan to 95 million yuan. This decrease, along with the gains from financial instruments, has contributed to the net profit turnaround.
Shouhui Group Ltd. attributes the turnaround mainly to gains from changes in the book value of financial instruments issued to investors. The gains increased by between 795 million yuan and 815 million yuan from a loss in the year-ago period.
Despite the net profit turnaround, the company's performance for the first half of the year has been affected by the challenging macroeconomic environment and changes in the insurance sector. Shouhui Group Ltd. will continue to focus on improving its core operations and navigating the complex business landscape in the coming months.
The improved financial performance of Shouhui Group Ltd. can be largely attributed to the gains from changes in the book value of financial instruments issued to investors, posing a positive impact on their business. However, the anticipated revenue for the first half of the year is projected to decrease, suggesting that the net profit turnaround primarily stemmed from financial gains rather than business growth.
